The hog industry is improving but still ways to go

Perry Mohr, general manager of H@ms Marketing Services in Winnipeg, MB says hog producers in Manitoba and Saskatchewan most likely averaged 10 to 15 dollars a pig in 2011, some losing 10 and a few making up as high as 30 dollars.
Many producers have dug such a deep hole in last five years, they may find it hard taking even a small part of the profits to the bank.
"If anyone tells you they made 30 dollars a pig last year, maybe missing a line or two in their cost of production figures," says Mohr. I would suggest a realistic industry wide number would be somewhere in the 10 to 15 dollars a hog actual profit, even that may be stretching it a little bit. The producers are a long ways from digging themselves out of the hole dug in the last three to four years.
He figures the only way for them to get it back is to hang in there until things really turn around and they will, but not nearly as quickly they would probably like it.
"My projection for profitability for next year is prices will be very similar to what we had this year," says Mohr. "We will have a decent hog price, it might be even a little bit less than last year but cost of production should be a little bit less too."
He says don't expect anyone clamouring at the door to build extra barns, or bankers enthusiastically throwing cash at the industry. The banks so to speak are holding a tremendous amount of loans he suspects, and many in arrears.
Producers may have done ok and stayed flush last year, but Mohr knows of many hog farmers that took out loans from the Manitoba Pork Council, maybe chiseling away at paying those back or maybe not even started.
"While things look a lot better than they did back over the last three years, they still aren't good," he says.
Turning to the 64 dollar question in Manitoba regarding the hog moratorium and the barns standing empty for three years or more, will the government treat pigs going in as new or old inventory.
Some hog farmers shut down because of the buyout, others voluntarily, and still others, market conditions and high feed costs made thing untenable and banks shut them down.
Mohr says the system will count those animal units someplace, but exactly how and where he doesn't know.
"In my mind a person should not have been eligible for the buyout if that barn was not allowed to be reopened," he says. "Again I say that somewhat guardedly because I think at the end of the day it will be the producer's decision at the end of the buyout period whether or not he elects to get back into pigs."
The H@ms Marketing general manager thinks those pigs will go back into production in some way because the province does need to create, believe it or not, some more finishing spaces.
However, to create finishing spaces, whether to bring existing barns up to speed or to building new ones will costs money.
"The regulations have changed to such a degree that building a barn up to whatever the standards are to be today, you can't pay for all of those upgrades and improvements and actually expect the barn to pay for itself over a period of time under current market conditions," says Mohr.
He believes based on the scuttlebutt in the industry, there will be an opportunity for bacon hogs from Manitoba particularly, but from Western Canada for some hogs to start flowing into the United States, possibly as early as March to at least one if not two, A class processors.
It won't be huge volumes because most of the hogs are currently produced under some kind of contractual agreement. A producer can't simply break a contract and ship elsewhere, and secondly, most people will be a little bit leery about breaking existing relationships when a new relationship means shipping across a border.
Country of Origin Labelling has burnt Canadian hog farmers pretty hard because it limited pricing options for Canadian producers.
However, Mohr says it was an opportunity for Canadian processors to lower the prices during this time, but they didn't do that either.
"We will in the future have a little more leverage depending on how aggressive those U.S. processors become for Canadian hogs," he says. •
— By Harry Siemens